In the book Reinventing Social Change, the author explores the racist and sexist roots behind the devaluing of social change sector leaders and organizations. One way nonprofits continue to be victimized is by shortchanging overhead. Nonprofits are told to keep non-program expenses as low as possible, with less than 20% being the standard. Government funders often use 10% de minimis rules in procuring or granting services from nonprofit providers, which grossly underestimates how much it actually costs to run a nonprofit business. In comparison, for profit companies were found to have median indirect cost rates of 34-78%. High expectations of nonprofit performance coupled with low expectations for supporting true costs leads to a pervasive culture in the nonprofit sector of burn out and stress.
Fair Chance believes small, community-based nonprofits play a critical role in alleviating the impact of poverty on children, youth, and families. These organizations are mission-driven and led by passionate, often POC leaders, locked in a cycle of applying for grants and contracts and not being paid by funders for the true costs of delivering those services. Fair Chance is a founding member of a group of DC-based nonprofits called the Coalition for Nonprofit Equity. Through this group, we have been able to work with the DC Council to pass the Nonprofit Fair Compensation Act of 2020 and are working to enforce its implementation. Recently, we provided a two-part training with 170 registrants on nonprofit rights to full indirect cost compensation under the Act and how to calculate an indirect cost rate. We are committed to continuing to educate nonprofit leaders about how to stand up and refuse to play by tired rules that limit and keep the social sector in a “nonprofit starvation cycle.”
As the summer winds down and we anticipate the coming fall, I want to announce two opportunities to engage with our work. We are currently conducting outreach for our next cohort of nonprofits in DC for the year-long Praxis Partnership. Applications are due Friday, October 1. We also have a date for an outdoor, in-person 2021 Butterfly Bash: Wednesday, October 6! We cannot wait to celebrate and showcase the great work that nonprofits leaders are doing in our community.
Gretchen Van der Veer, PhD
Chief Executive Officer